Lunes 27/07/15 órdenes de bienes duraderas

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10:12 Eurostoxx 50: Objetivo sería volver a los máximos previos

[ GAS NATURAL ]
Los analistas de M&G Valores señalan sobre el Eurostoxx 50 que el objetivo sería volver sobre los máximos previos.

"A medio plazo los índices europeos tienen que encontrar una pendiente sostenible después de la subida vertical de los primeros meses del año".


El petróleo podría seguir cayendo durante los próximos 3 años o más

Carlos Montero
Lunes, 27 de Julio del 2015 - 10:28:00

Hace unos meses la caída de los precios del petróleo ocupaba las cabeceras de los principales medios financieros y generalistas. El barril brent pasó de los 110 dólares a finales de 2013 a por debajo de 50 dólares a principios de 2015.

El rebote posterior llevó a muchos analistas a creer que los descensos del crudo ya habían finalizado y que nos adentrábamos en una etapa de formación de suelo antes de una nueva onda alcista.

Morgan Stanley no cree en este escenario. De hecho, estos analistas comparan la situación actual del precio del petróleo con algunas de las peores recesiones de las últimas tres décadas. La recesión actual podría incluso competir con la caída icónica de 1986.

Martijn Rats y Haythem Rashed, analistas de Morgan Stanley, en un reciente informe a clientes, afirmaban que la confianza del mercado en una fuerte recuperación del petróleo estaba basada en cuatro premisas, y sólo tres han demostrado ser ciertas:

1. La demanda se elevará: Cierto

En teoría: La caída de los precios que se inició hace más de un año debería estimular la demanda. El petróleo barato significa menores costes de fabricación, envíos más baratos, más viajes por carretera en verano.

En la práctica: A pesar de que la economía china sigue moderándose, la demanda global de petróleo ha aumentado en alrededor de 1,6 millones de barriles día sobre la media del año pasado.

2. El gasto en nuevo petróleo caerá: Cierto

En teoría: Los precios más bajos del petróleo deberían obligar a las empresas de energía a reducir el gasto en nuevos suministros del petróleo, y el costo de perforación y bombeo deberían disminuir.


En la práctica: Efectivamente, desde octubre el número de nuevos equipos de perforación activos ha disminuido en un 42%. Más de 70.000 trabajadores petroleros han perdido sus puestos de trabajo a nivel mundial, y sólo en 2015, las compañías petroleras cotizadas han reducido aproximadamente en 129 mil millones de dólares sus gastos de capital.

3. Los precios de las acciones siguen siendo bajos: Cierto

En la teoría: Si bien los mercados de petróleo se reequilibrarán a sí mismos, los precios de las acciones de las compañías petroleras deben permanecer baratos, preparando el escenario para un fuerte repunte.

En la práctica: Sí. Las grandes petroleras están cotizando cerca de mínimos de 35 años, utilizando dos métodos diferentes de valoración.

4. El suministro del petróleo caerá: No se ha producido

En teoría: Con una fuerte demanda de petróleo y menos dinero para la perforación y exploración, la superabundancia mundial de petróleo debería disminuir. Esto permitiría la recuperación de los precios.

En la práctica: Ha sucedido lo contrario. Mientras que la producción en los EE.UU. se ha estabilizado desde junio, la OPEP ha asumido el papel de soporte del mercado.

Morgan Stanley cree que aunque los precios del petróleo pueden aún recuperarse, porque la OPEP no tiene mucha más capacidad excedentaria y las reservas del petróleo ya han sido afectadas, existe un alta posibilidad de que el suministro del petróleo aumente de nuevo por el levantamiento de las sanciones contra Irán, y la posible mejora de la situación en Libia. La producción en EE.UU. también podría subir de nuevo. Morgan Stanley concluye el informe afirmando que las caídas en los precios del petróleo podrían durar tres años o más, “mucho peor que en 1986”.

Lacartadelabolsa

[Fenix]

10:33 Índice manufacturero Fed de Dallas -4,6 julio vs -3,5 esperado
Anterior -7,0
El índice manufacturero de la Fed de Dallas se sitúa en julio a -4,6 frente -3,5 esperado y -7,0 anterior.


10:32 El BCE compra 10.263€ millones en bonos la última semana
El BCE compra 10.263 millones de euros en bonos soberanos la última semana dentro de su programa QE.

[Fenix]

11:37 El gobierno chino va incrementar el apoyo a la renta variable
Según una fuente del gobierno chino, tras las fuertes caídas del mercado de valores chino hoy (-8,5%), se va incrementar el apoyo del regulador a estos activos para intentar mantener los precios. Se incrementarán las compras en mercado.

11: 40 La fuerte caída de la bolsa china (-8,5% en la jornada de hoy), es un reflejo del creciente miedo inversor a un hard landing en la economía del país. Esta incertidumbre se ha trasladado a los mercados europeos, con unos inversores que empiezan a valorar que la situación griega no era el riesgo principal de los mercados, sino la ralentización económica a nivel global, y los decepcionantes resultados empresariales que se están publicando.

[Fenix]

Cartera de 5 Grandes de Renta 4 Banco

Lunes, 27 de Julio del 2015 - 12:30
Cartera de Estados Unidos queda formada por: Accenture (10%), Baxter International (10%), Celgene (10%), Colgate Palmolive (10%), Disney (10%), Google A (10%), McDonald’s (10%), Metlife (10%), P&G (10%) y Walgreen (10%).

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13:10 ¿Qué se espera de la reunión de la Fed de esta semana?
El miércoles la Fed terminará una reunión de dos días de duración en la que previsiblemente mantenga sus tipos de interés inalterados. Esta mañana publicábamos la filtración de sus estimaciones económicas y de tipos, en la que se refleja que se producirá una subida de tipos antes de final de año y probablemente dos.

Los analistas de Goldman Sachs esperan de esta reunión lo siguiente:

- La declaración del FOMC debería hacer hincapié en la dependencia de los datos y evitar cualquier señal sobre el momento de la primera subida de tipos.
- Esperamos una evaluación cautelosamente más optimista de las perspectivas de los datos económicos.
- El mercado otorga una probabilidad menor al 40% de subida de tipos en septiembre. La declaración del FOMC de julio debería impulsar ligeramente esta probabilidad.

13:30 "La reunión de la Fed guía al dólar"
Bankinter
Eurodólar (€/USD).- De cara a los próximos días estimamos que el dólar se fortalecerá. El miércoles se celebra la reunión de tipos de la Fed y, aunque no estimamos un endurecimiento de la política monetaria, previsiblemente mostrarán una visión positiva de la economía y harán referencia a una subida de tipos próxima. Rango estimado (semana): 1,095/1,109.

[Fenix]

13:45 RBS mantiene su objetivo de 1,05 para el euro/dólar
Los analistas de RBS mantiene su objetivo para el euro/dólar en el 1,05, aunque creen que hay riesgos de que la caída sea más pronunciada como son:

- La relajación de las tensiones en Grecia no está vinculada a la evolución del euro/dólar.
- Elevado posicionamiento corto en el euro/dólar en las últimas semanas.
- Los precios del petróleo vuelven a la senda bajista, lo que hace menos probable que el BCE se vea presionado por la inflación y por tanto abandone prematuramente su política monetaria ultra expansiva.
- Los datos sugieren que la Fed subirá los tipos en septiembre.



Los smartphones están haciendo lo mismo que hicieron las TVs y radio

Lunes, 27 de Julio del 2015 - 14:32:00

Los smartphones han cambiado la forma en que vivimos, y los datos más recientes sugieren que es ahora una parte vital de nuestra vida cotidiana.

De acuerdo con los nuevos datos de Gallup, vía Statista, el 41% de los adultos estadounidenses mayores de 18 comprueba sus smartphones al menos varias veces por hora. Aproximadamente el 11% de ellos respondió que lo comprobaban cada pocos minutos. Además, un asombroso 81% de los usuarios de teléfonos inteligentes, dijeron que mantienen su teléfono cerca de ellos "casi todo el tiempo durante las horas de vigilia."

La encuesta se basó en respuestas a 15.747 propietarios de teléfonos inteligentes en los EE.UU..


El hecho de que los estadounidenses estén tan obsesionado con sus teléfonos inteligentes no es nada nuevo. Pero todavía no está claro exactamente cuáles serán las consecuencias de esto. Gallup sugiere que la mayor implicación es que los smartphones están permitiendo a los individuos permanecer constantemente conectados con el resto del mundo, haciendo lo que los televisores y radios hicieron en el pasado.

"Ciertamente, la televisión, la radio y el teléfono cambiaron la forma de relacionarse con el mundo, y el teléfono inteligente, sin duda, está haciendo lo mismo", dijo.

[Fenix]

¿Están creando los bancos centrales una nueva burbuja?

Lunes, 27 de Julio del 2015 - 14:58:00

El debate más importante de la economía en este momento es la cuestión de si las bajas tasas de interés en Europa, Reino Unido y Estados Unidos están creando otra burbuja que finalmente podría estallar con consecuencias desastrosas.

Una nueva nota a clientes de los economistas de Morgan Stanley sostiene que sí, que es posible que la Reserva Federal de Estados Unidos, el Banco de Inglaterra y el Banco Central Europeo estén causando que aún no haya inflación al mantener los tipos de interés cercanos a 0% durante un período prolongado.

El título de su informe es: "¿Podríamos estar infravalorando la inflación?"

En primer lugar, el contexto. Se le puede perdonar a todo inversor no darse cuenta de que se podría estar formando una burbuja porque no está causando la clásica inflación monetaria. “En su lugar lo que se están inflando son los precios de los activos”, señala Jim Edwards en Business Insider. “La inflación del dinero, o la inflación monetaria, es aterradora, ya que nos hace más pobres al instante, ya que el precio de todo lo que te rodea sube. Sólo hay una cosa buena acerca de la inflación de dinero: es fácilmente observable ya que ocurre todos los días. Y se puede solucionar fácilmente: los bancos centrales pueden elevar las tasas de interés drásticamente, encareciendo el dinero que se presta o se invierte. Cuando el dinero es más difícil de conseguir, ya que es más caro pedirlo prestado, entonces la inflación desaparece muy rápidamente.

Pero la gente no siente miedo cuando los activos se inflan. Por un lado, los precios de los activos no suben a la misma velocidad. Las acciones pueden estar en máximos históricos en un momento, pero el precio del petróleo podría estar en niveles históricamente bajos. Y, francamente, a casi todos les gusta la inflación de los activos. Las acciones suben y suben, los fondos de inversión y de jubilación ofrecen jugosas rentabilidades y es genial saber que su casa vale de repente tanto dinero.

La inflación de activos se soluciona de la misma manera que la inflación de dinero: se elevan las tasas de interés, y todo el dinero barato que entró en esos activos, de repente comienza a salir, especialmente cuando los bancos y los bonos comienzan a pagar intereses por encima del 0%.

El problema, como todos aprendimos en la caída de las punto com del 2000 y la crisis de crédito del 2008, es que un colapso en la inflación de activos es doloroso para los que se quedan atrapados en unos activos que de repente valen cero. (Los activos son menos líquidos que el dinero en efectivo, por lo que cuando caen tienden a caer con fuerza. Piense en los precios inmobiliarios en 2008-2009.)


Sin embargo, pocas personas entienden este debate, a pesar del hecho de que todo - literalmente todo - depende de la respuesta a la pregunta que Morgan Stanley plantea.

Estos son algunos ejemplos de lo que estamos hablando:

Las empresas privadas de tecnología respaldadas por capital se encuentran actualmente en medio de un enorme auge. No estamos en la escala de la burbuja de las punto com del 2000, pero el número y valor de los acuerdos de financiación se acerca rápidamente a ese tamaño, según las estadísticas de PwC:

Sin embargo, dentro del mundo de la tecnología, las personas no parecen estar muy preocupadas acerca de los tipos de interés. El capital riesgo disfruta con el hecho de que haya 102 unicornios en el mundo. Los unicornios son nuevas empresas de tecnología con una valor de más de mil millones de dólares. Solían ser raro. Ahora hay una de estas nuevas empresas cada semana. Nadie sabe cuántas son rentables.

También tenemos pleno empleo en el Reino Unido y los EE.UU., y señales de una fuerte subida de precios inmobiliarios en Londres, Noruega y Alemania.

Moody's, el servicio de calificaciones crediticias, dijo recientemente que el Banco Central Europeo estaba inflando una nueva burbuja inmobiliaria en Europa.

Los bancos centrales, sin embargo, mantienen las tasas en cero. Están haciendo esto porque creen que el crecimiento económico es débil. Es ciertamente débil en Grecia, España e Italia. Así que el BCE tiene una excusa para mantener el euro barato, incluso si el crecimiento en Alemania es sólido. Pero Reino Unido, Alemania y EE.UU. están cerca del pleno empleo. Sus economías se ven fuertes. Y sin embargo, sus bancos también tienen tipos al 0%.

Morgan Stanley ha intentado buscar signos de inflación y ha señalado que su tesis es correcta, los riesgos al alza para la inflación que destacamos podrían materializarse en los próximos 12 a 18 meses.

Con todo, Morgan Stanley llega a una conclusión matizada en vez de a un veredicto contundente.


"En los argumentos que proporcionamos anteriormente, las medidas de inflación pueden no reflejar adecuadamente la inflación. Esto puede significar que medidas adicionales de los bancos centrales son "correctas".

Sin embargo, para los vigilantes de las burbujas, Morgan Stanley plantea una pregunta muy interesante: ¿por qué diablos están las tasas de interés a cero cuando las principales economías occidentales del mundo están en el pleno empleo? ¿Y por qué eso no es inflacionario?

Fuentes: Jim Edwards (BI)
Carlos Montero
Lacartadelabolsa

[Fenix]

¿Están creando los bancos centrales una nueva burbuja?

Lunes, 27 de Julio del 2015 - 14:58:00

El debate más importante de la economía en este momento es la cuestión de si las bajas tasas de interés en Europa, Reino Unido y Estados Unidos están creando otra burbuja que finalmente podría estallar con consecuencias desastrosas.

Una nueva nota a clientes de los economistas de Morgan Stanley sostiene que sí, que es posible que la Reserva Federal de Estados Unidos, el Banco de Inglaterra y el Banco Central Europeo estén causando que aún no haya inflación al mantener los tipos de interés cercanos a 0% durante un período prolongado.

El título de su informe es: "¿Podríamos estar infravalorando la inflación?"

En primer lugar, el contexto. Se le puede perdonar a todo inversor no darse cuenta de que se podría estar formando una burbuja porque no está causando la clásica inflación monetaria. “En su lugar lo que se están inflando son los precios de los activos”, señala Jim Edwards en Business Insider. “La inflación del dinero, o la inflación monetaria, es aterradora, ya que nos hace más pobres al instante, ya que el precio de todo lo que te rodea sube. Sólo hay una cosa buena acerca de la inflación de dinero: es fácilmente observable ya que ocurre todos los días. Y se puede solucionar fácilmente: los bancos centrales pueden elevar las tasas de interés drásticamente, encareciendo el dinero que se presta o se invierte. Cuando el dinero es más difícil de conseguir, ya que es más caro pedirlo prestado, entonces la inflación desaparece muy rápidamente.

Pero la gente no siente miedo cuando los activos se inflan. Por un lado, los precios de los activos no suben a la misma velocidad. Las acciones pueden estar en máximos históricos en un momento, pero el precio del petróleo podría estar en niveles históricamente bajos. Y, francamente, a casi todos les gusta la inflación de los activos. Las acciones suben y suben, los fondos de inversión y de jubilación ofrecen jugosas rentabilidades y es genial saber que su casa vale de repente tanto dinero.

La inflación de activos se soluciona de la misma manera que la inflación de dinero: se elevan las tasas de interés, y todo el dinero barato que entró en esos activos, de repente comienza a salir, especialmente cuando los bancos y los bonos comienzan a pagar intereses por encima del 0%.

El problema, como todos aprendimos en la caída de las punto com del 2000 y la crisis de crédito del 2008, es que un colapso en la inflación de activos es doloroso para los que se quedan atrapados en unos activos que de repente valen cero. (Los activos son menos líquidos que el dinero en efectivo, por lo que cuando caen tienden a caer con fuerza. Piense en los precios inmobiliarios en 2008-2009.)


Sin embargo, pocas personas entienden este debate, a pesar del hecho de que todo - literalmente todo - depende de la respuesta a la pregunta que Morgan Stanley plantea.

Estos son algunos ejemplos de lo que estamos hablando:

Las empresas privadas de tecnología respaldadas por capital se encuentran actualmente en medio de un enorme auge. No estamos en la escala de la burbuja de las punto com del 2000, pero el número y valor de los acuerdos de financiación se acerca rápidamente a ese tamaño, según las estadísticas de PwC:

Sin embargo, dentro del mundo de la tecnología, las personas no parecen estar muy preocupadas acerca de los tipos de interés. El capital riesgo disfruta con el hecho de que haya 102 unicornios en el mundo. Los unicornios son nuevas empresas de tecnología con una valor de más de mil millones de dólares. Solían ser raro. Ahora hay una de estas nuevas empresas cada semana. Nadie sabe cuántas son rentables.

También tenemos pleno empleo en el Reino Unido y los EE.UU., y señales de una fuerte subida de precios inmobiliarios en Londres, Noruega y Alemania.

Moody's, el servicio de calificaciones crediticias, dijo recientemente que el Banco Central Europeo estaba inflando una nueva burbuja inmobiliaria en Europa.

Los bancos centrales, sin embargo, mantienen las tasas en cero. Están haciendo esto porque creen que el crecimiento económico es débil. Es ciertamente débil en Grecia, España e Italia. Así que el BCE tiene una excusa para mantener el euro barato, incluso si el crecimiento en Alemania es sólido. Pero Reino Unido, Alemania y EE.UU. están cerca del pleno empleo. Sus economías se ven fuertes. Y sin embargo, sus bancos también tienen tipos al 0%.

Morgan Stanley ha intentado buscar signos de inflación y ha señalado que su tesis es correcta, los riesgos al alza para la inflación que destacamos podrían materializarse en los próximos 12 a 18 meses.

Con todo, Morgan Stanley llega a una conclusión matizada en vez de a un veredicto contundente.


"En los argumentos que proporcionamos anteriormente, las medidas de inflación pueden no reflejar adecuadamente la inflación. Esto puede significar que medidas adicionales de los bancos centrales son "correctas".

Sin embargo, para los vigilantes de las burbujas, Morgan Stanley plantea una pregunta muy interesante: ¿por qué diablos están las tasas de interés a cero cuando las principales economías occidentales del mundo están en el pleno empleo? ¿Y por qué eso no es inflacionario?

Fuentes: Jim Edwards (BI)
Carlos Montero
Lacartadelabolsa

[Fenix]

Primavera árabe

Lunes, 27 de Julio del 2015 - 15:52:00

¿Se acuerdan? Varios países arabes se embarcaron hace cuatro años en un proceso de cambio político, bajo la ilusión de una parte de la población en que esto llevaría a una mejora económica e institucional.

Egipto, Libia, Tunez, Yemen…pero en menor medida también en Marruecos y en Jordania; países donde ha coincidido una cierto aislamiento económico, con consecuencias evidentes en términos de baja modernización económica. Empresas públicas grandes e ineficientes, abultada estructura de la Administración Pública “axficiaron” al sector privado… (leo literalmente una nota de análisis del FMI sobre el tema publicada en junio pasado).

http://www.imf.org/external/pubs/ft/fan ... azarei.htm

¿Qué caracterizaba a estos países?

· Más de un tercio de la población de estos países no tenía acceso a la atención sanitaria, educación y servicios básicos como alcantarillado, agua potable y electricidad

· Subsidios de precios que en muchos casos no reducían la desigualdad, incluso la favorecían al reducir los recursos disponibles para sanidad y educación

· Niveles deficientes de gobernabilidad

· Niveles de desempleo elevados, especialmente entre los jovenes

· Difícil acceso a la financiación

¿Qué ha pasado en estos últimos cuatro años? Lamentablemente, los conflictos recientes en algunos países o en la región donde se ubican ha llevado a un deterioro de la situación económica tras una mejora inicial motivada por la ayuda externa y reformas estructurales desiguales como desigual ha sido el propio contexto político interno en este periodo.


Por ejemplo, en los siguientes gráficos podemos ver algunos indicadores de gobernabilidad en cinco países (y con escasa mejora)….

Su crecimiento per cápita ha sido muy inferior al registrado por el resto del mundo….


Por último, el indicador mundial de prosperidad los situa en general en los peores puestos….


¿Conclusión de la Nota?

Escaping the pre-2011 legacy is critical for the success of the Arab countries in transition. They must speed up and intensify structural reforms to maintain macroeconomic stability and achieve high, sustainable, and inclusive growth. The structural weaknesses that caused the divide between general macroeconomic indicators and living conditions in these countries cannot be ignored. In all countries, this will involve ambitious governance reforms, building an enabling favorable business environment, moving from state-dominated to private investment, increasing access to finance, implementing labor market and education reforms to stimulate employment, forming efficient social safety nets to protect the vulnerable, and reducing trade barriers to smooth integration into the world economy (IMF, 2014b).

Each country must develop its own vision and path to reform. The task will be even more difficult than before the Arab Spring. Governments have limited financial resources, and the external environment is overshadowed by conflicts in the region and little appetite for investment, despite the relief offered by lower international oil prices. Overcoming past resistance to reform calls for political will and determination, and strong support from the international community


José Luis Martínez Campuzano
Estratega de Citi en España


US Mint Sells Most Physical Gold In Two Years On Same Day Gold Price Hits Five Year Low
Submitted by Tyler D.
07/24/2015 - 20:49

Just like in the case of silver three weeks ago, today's gold liquidation was not due to selling of physical metal. In fact, quite the contrary: according to the US mint, so far in July the mint has sold a whopping 143,000 ounces of physical gold - the most in over two years, or since April of 2013 - even as the price of gold briefly slid to the lowest level in 5 years.

[Fenix]

The Three Cs Keeping CFOs Up At Night: China, Commodities, Currencies
Submitted by Tyler D.
07/25/2015 - 11:24

With two-thirds of companies still set to report, and as the second quarter earnings season continues and assures the first revenue and EPS recession since 2009, the question on everyone's lips is just how bad will/can it get. The answer will be determined largely by any/all of the following three "C"s which continue to define the ugly face of non-GAAP corporate earnings for the past 3 quarters which appear set to persist for the foreseeable future.


Jim Grant: Financial Prices Should Be Discovered, Not Administered
Submitted by Tyler D.
07/25/2015 - 12:30

"The modern financial animal is wont to assume that he or she lives in an age of science. The truth is we live in an age of pseudoscience. Far from dealing in science, central bankers, and, to a degree, investment bankers and security analysts, employ magical thinking... For an individual to fix Libor is a crime. For a central bank to suppress European bond yields is an act of financial statesmanship..."

[Fenix]

Hillary Agrees To Testify Publicly Over Benghazi Deaths
Submitted by Tyler D.
07/25/2015 - 14:20

With the FBI and DoJ now involved in yet another Hillary Clinton scandal - that she sent confidential emails from her personal email server - it seems the 'presidential' former Secretary of State has felt pressured to come somewhat clean. While some might argue "what difference does it make?" The Washington Post reports that Hillary Rodham Clinton will testify on Oct. 22 before the House select committee investigating her role in connection with the deaths of four Americans in Benghazi, Libya. The testimony - before the committee formed last year - will be in a open setting (apparently against the wishes for privacy that committee chairman, Rep. Trey Gowdy initially requested).

[Fenix]

Venezuela's Hyperinflation Crack-Up Boom On Its Way To Outer Space
Submitted by Tyler D.
07/25/2015 - 15:00

Venezuela’s hyperinflation is reaching its final stages. It is probably already far too late for the government to stop the complete collapse of its currency. The bolivar is in the process of transforming from a medium of exchange to tinder for wood-stoves. Venezuelans who had the presence of mind to convert their savings into gold or foreign currency in good time are likely to survive the conflagration intact. Governments never seem to learn. They all believe they can somehow overrule economic laws by diktat. This is not only true of Venezuela’s government, but of practically every government in today’s world. Central planning of money has been adopted everywhere. Venezuela merely shows us what the end game for every fiat money system looks like.


The Junk Bond Heatmap Has Not Been This Red In A Long Time
Submitted by Tyler D.
07/25/2015 - 16:05

But for those equity investors caught in the artificial glare of the goalseeked stock market to appreciate how truly ugly it has gotten in the junk bond space, here is a heat map showing the YTD change in junk bond prices (relative box size indicates total outstanding debt amount) when seen in terms of either the 31 subsectors or the 805 issuer companies that make up Citi's junk bond tracking universe.

[Fenix]

In Key Decision, Junk-Rated Chicago's Pension Reform Bid Ruled Unconstitutional
Submitted by Tyler D.
07/25/2015 - 19:05

On Thursday, we previewed a critical court ruling involving Chicago mayor Rahm Emanuel’s effort to cut pension expenses and plug a yawning budget gap. As expected, Emanuel’s plan was determined to be unconstitutional by Rita M. Novak of the Cook County Circuit Court, further imperling the junk-rated city's financial future and perpetuating a pension ponzi scheme.


Should You Buy A House?
Submitted by Tyler D.
07/25/2015 - 20:50

"By stepping back and looking at the big picture, we can see that real estate should be correcting and trending down. The reasons why our grandparents bought their homes have changed. Government intervention cannot last forever. It will change from accommodation to devastation, when they finally run out of ideas. As for buying a house, I would consider it more of a luxury as opposed to an investment, and one has to be prepared for the possibility of it being a depreciating asset, especially if one decides to move."

[Fenix]

Greek Capital Controls To Remain For Months As Germany Pushes For Bail-In Of Large Greek Depositors
Submitted by Tyler D.
07/26/2015 - 10:24

With every passing day that Greece maintains its capital controls, the already dire funding situations is getting even worse, as Greek bank NPLs are rising with every day in which there is no normal flow of credit within the economy. This has led to a massive bank funding catch-22: the longer capital controls persist, the less confidence in local banks there is, the longer the bank run (capped by the ECB's weekly ELA allotment), the greater the ultimate bail out cost, and the greater the haircut of not only equity and debt stakeholders but also depositors.


Energy Companies Face "Come-To-Jesus" Point As Bankruptcies Loom
Submitted by Tyler D.
07/26/2015 - 09:29

"I don’t know if you’ll get the same slack in October as in April, absent a turnaround in the market price for oil. It’s going to be that ‘come-to-Jesus’ point in time where it’s about how much longer can they let it play. If the banks get too aggressive, they’re going to hurt the value for themselves and their ability to exit. So they’re playing a balancing act."

[Fenix]

The Big, Bad Bear Case
07/26/2015 12:08 -0400


Submitted by Northman Trader

The Big Bad Bear Case

My aim with this article is to outline, with facts, large global structural issues that I believe everyone, bulls and bears alike, should be fully aware of. While some of this discussion may rattle the cage a bit you will hopefully find this article well researched and informative.

Recently I’ve outlined why we switched our trading stance from buy mode (Door Shut) to sell mode (Inversion) on stocks. This week I’ve also outlined the aggregate technical factors that have us very cautious on stocks in general (Totality) while not precluding the possibility of new highs.

This article, however, will focus on much larger structural issues that have been building for years, decades indeed. And no this article is not so much about central banks, debt issues, Greece, China, deficits, etc. While all these are important as part of the overall picture, they are mere current symptoms of a much larger issue that is at the core of all that is already in play and will only deepen in our societies in the decades to come: Institutionalized poverty with an ever widening divide between the haves and the have nots which will result in an eventual drastic revaluation of asset classes across the board.

And before you think I’m off on a hyperbolic rant let me assure you my reasoning will be very much fact based and I have reason to believe the US Fed and Janet Yellen are very much aware of it all, but have no solution to prevent it from happening. In fact it is mathematically unavoidable.

A few weeks ago in The Greek Butterfly I discussed the concept of a global math construct that needs to maintain its integrity to make global debt serviceable. To that end I concluded that they would not let Greece default.

After much scary talk and fluttering stock prices we now know the conclusion: Greece was saved yet again and new debt negotiations are under way.

During the same time we saw China correcting hard and quickly the Chinese spent $800 billions dollars to prop prices back up. Again: Fighting symptoms, but not addressing a root cause gnawing at it all.

And we have seen this need to rescue falling stock markets in action for years and indeed central bank intervention has only accelerated in 2015 with over 50 global central banks rate cuts and a new massive QE program launched, this time courtesy of the ECB.

Why do you think they are all doing this and have been doing it for years? Decades even? The simple answer is they HAVE to. They have no other choice. And let me explain why.

I’ll do so be telling you a story that starts with the symptoms, the larger trends we have all been able to observe. I’ll also throw in some factoids that may surprise and/or shock you.

Let’s start with the basics to get everyone on the same page:

Since the early 1980’s debt, both in absolute terms and as a percentage of GDP, has increased exponentially to the point that debt is now over 100% of GDP:

Debt to GDP

Public debt

In short governments, globally, not only the US, have wildly overstated organic GDP figures and borrowed heavily maintaining the illusion of growth.

It’s called deficit spending and its impact is enormous. For example, following the financial crisis US deficit spending alone constituted over 10% of GDP at some point. It has improved since then, but still remains squarely stuck in negative territory:

deficits

The public justifications for these deficits: Usually a combination of “we must prevent a crisis or react to a crisis, and we need to cut taxes to incentivize businesses to create jobs and this will promote growth”. And future growth will justify the expense.

The result: Huge sums of debt that need to be financed with debt service payments impacting the discretionary government budget. The truth: These debt service payments are only manageable via artificially induced low interest rates. At current debt levels the discretionary budget would simply buckle under normalized rates.

The problem should be obvious: Debt keeps growing and GDP growth remains completely elusive and the trend shows ever shrinking nominal growth:

GDP vs Sales

On a real basis it appears it will not get better either. Ever. In fact it will get worse according even to the Federal Reserve, an institution known for consistently overestimating growth:

FED projections

Note these projections above never see a recession coming and unemployment will forever improve while rates are rising for years to come. To which I say: Pure fantasy.

Let’s address the employment picture and the quality of jobs and benefits.

According to policy makers businesses were incentivized to hire via tax cuts and low interest rates. Yet, oddly enough during the same time of debt expansion labor markets have shrunk on a relative basis with more and more people no longer in the labor force and the labor participation rate shrinking dramatically:

not in labor force

Participation

Hence it can be clearly stated that taking on debt and cutting taxes has not resulted in an aggregate increase in employment. The opposite has happened and employment peaked during the 2000 market bubble.

But at least we have growth and people are making more money. Right? No.

Real median household incomes have shrunk since their peak coinciding with the 2000 stock market bubble:

Real median income

They have not recuperated at all, in fact median household incomes are at roughly the same level they were over 20 years ago.

Which is odd since officially the unemployment rate has been shrinking to a level consistent with levels that typically constitute low unemployment, i.e. indicative of a growing labor market and a demand for workers which would typically result in rising wages:

UE

Several items to note here:

1. During the previous drops in the unemployment rate in 2000 and 2006/7 real median household incomes had experienced a temporary spike. Not this time around.

2. Since the 1990s reaching low unemployment rates coincided with a “peak” in stock markets and preceeded recessions. More on this later.

And now it gets really interesting. As we all know the Fed reduced interest rates to zero as a response to the financial crisis in 2008. Yet a closer look shows that the Fed’s move was in essence only the logical conclusion of a trend that started in the 1980s, the same time debt expansion began and labor participation started to decline:

Funds rate

When the Fed under Ben Bernanke embarked on ZIRP combined with a massive bail-out and a QE program there was no stated intent or goal to have ZIRP in place for 7 years, no was there a plan for QE2, or QE3 nor did anyone envision we would still be in this place in 2015. So what went wrong?

A number of things frankly and this is where it’s going to get really dicey.

The root of the crisis this time was housing and people were losing their homes by the millions. But who was in more trouble? Financial institutions and they had to be made whole right? Mark to market was eliminated and banks had flexibility to make their balance sheets look sound when in fact they weren’t. Prices needed to rise to make the math work.

And it has been a seemingly smashing success as house prices have been reflated to almost 2007 levels:

HOUSE prices

All thanks to zero rates. The premise was to rescue the financial system, to encourage lending, business formation and hiring to produce economic growth. Right?

But that didn’t really happen. It happened on the surface, but a closer examination of the data leads to the conclusion that there is major cyclical downturn under way already.

To start: Not only have housing prices increased substantially so have rental prices and they are higher than ever:

Rental

While zero rates have permitted many consumers to refinance their mortgages at cheap rates many others couldn’t. Most because they can’t afford to or they don’t qualify or both.

And this is a problem because housing is still the largest expense line item in a family’s budget.

Though to deal with rising housing and rental prices when your real income growth looks like this:

private-sector-wage-change-2007-2014

So flat out 85% of Americans have experienced negative wage growth since 2007 while housing prices have gone up. And many more Americans are no longer in the labor force as we have established. That’s a problem.

Other key issues: Almost 50% of Americans don’t have full time jobs and one large consequence of this: Little to no benefits and no pensions. Even the folks at Blackrock are getting concerned. Here’s COO Tony James recently who calls the issue a hidden crisis:

I have the view that the hidden crisis in America that no one is talking about is what’s going to happen with all of these 20, 30, 40-year-olds who no longer have corporate pension funds of defined benefit.

But this type of job creation is celebrated on Wall Street, think Chipotle a restaurant chain whose stock keeps soaring, but what’s the aggregate job creation: Hourly jobs. As of December 2014 48,500 employees out of 53,090, or 91%, are hourly. Now I suppose that’s true for most restaurant chains and even Starbucks has an army of 130,000 baristas. But for all the hoopla about free college degrees and 401K matching programs the fact is those folks don’t earn much and there’s no real wage growth:

But baristas say Starbucks’ focus on profits and cost-cutting has increasingly led its leadership to tune workers out. Locke, who has worked for the company since 2006 and who earns roughly $16,000 a year, said she yearned for the Starbucks of old.

Hey, I’m just pointing out reality: The earnings potential for most people is grim and hence people are desperate to improve their odds. The big lure? College education and here too the answer is debt as people are forced to burden themselves with significant long term debt to even have a chance of an education:

Student loans

And the effects on the overall economy are crushing:

“The numbers are staggering: more than $1.2 trillion in outstanding student loan debt, 40 million borrowers, an average balance of $29,000….Men and women laboring under student debt “are postponing marriage, childbearing and home purchases, and…pretty evidently limiting the percentage of young people who start a business or try to do something entrepreneurial,” said Mitch Daniels, president of Purdue University and the former Republican governor of Indiana. “Every citizen and taxpayer should be concerned about it.”

So to summarize: Fewer people working overall, with 85% experiencing negative wage growth in jobs with little to no benefits and little upward income potential and no pension on the horizon while many are forced to indebt themselves and change their behavior to even have a shot at a higher education all while the cost of housing has increased dramatically. Any wonder retail sales stink?

But it gets worse.

We were told that tax cuts would promote business expansion, zero rates would promote growth and lending and a new dawning of the day.

It didn’t. Here are the long term trends:

New business formation:

Firm creation

Note goods producing firms continue to shrink and this also has ramifications and I address this further below.

Fixed Investment? The weakest cycle in over 50 years barley above par:

CAPEX

But stock markets are at all time highs, stocks are flying so there must be much growth? No:

sales growth

We never came even close to the growth of the mid 2000s and are continuing to see a regression in sales growth.

But then earnings expansion right? For some and for a while yes, but operating earnings are declining and buybacks and dividends have largely masked it all:

QE

In fact about one third of market cap gains since 2009 has been attributed to buybacks and dividends:

buybacks

Yet enormous wealth has been created and valuations have soared. Who benefits? Well we have already established that 85% of Americans have seen a decline in real wages. 50% of Americans do not own any stocks at all. I won’t go into depth on income and wealth inequality here as the facts are well established but the reality is this: 80% of Americans own virtually nothing whereas the top 10% own virtually everything:

wealth

And the most structurally disturbing and frankly atrociously embarrassing data point for America the richest country on the planet:

Twenty-two percent of American children were living in poverty in 2013 compared with 18 percent in 2008.

22%. Frankly unfathomable and structurally dooming as children’s future income, despite the occasional examples of exception, are squarely linked to the income of your family history. In other words: If you are born poor, you will remain poor, if you are born rich you will be rich:

poverty income

So a reasonable question may be: How are people who own nothing, who have been experiencing a decline in real wages and who are leaving the labor force in droves, ever to contribute to the economy at large? As in help GDP grow?

Look I have no problem with Mark Zuckerberg and Jeff Bezos and others getting stupidly rich off of their business ventures, but there are only so many yachts, islands, mansions, jets and bling one can buy. Despite popular belief it does get boring. Hence many billionaires are already pledging to get rid of all their wealth when they die and fair play to them for doing so.

But that doesn’t answer the larger question: How are all these trends pointing to a structural bull market? Why instead is this all pointing to a major bear scenario?

Two answers and now we get to the meat of all this:

1. Productivity growth. It’s frankly depressing:

Productivity

And this structural reality will eventually kill this bull market and Janet Yellen knows it’s a big problem as she admits in this clip:

Yellen

She is hoping. Well good for her, but hope is no strategy and the plain fact is productivity growth is and has been regressive and without it there’s no growth, no wage increases and no inflation.

In fact everything is pointing to deflation as commodities are crashing across the board:

Commodities

Not exactly the stuff that economic expansion dreams are made of is it?

So what’s the problem? I suspect there are 3 major underlying macro trends that all live under the same umbrella:

2. Technology.

First let me say that technology is awesome, it’s made our lives so much better in many ways and I wouldn’t want to live without it. Heck my entire livelihood centers around technology, but it is coming at a price and a heavy one indeed.

Let’s start with the commonly known one:

a. Outsourcing and restructuring.

For many years companies have sought to improve their cost efficiency by outsourcing jobs into other countries. no problem with that, but it has created a structural shift and the slack is not being picked up within the domestic economy. Yet this trend accelerated after the financial crisis and took on additional forms, mainly: Do more with less. Companies laid off millions of employees and the original notion was they would hire them back when things would get better. They haven’t in many cases, hence the labor participation rate has shrunk.

Instead what companies have found is that they can get away with fewer employees. Technology improved to the extent where this was possible. As manufacturing and production based companies took a second seat to the information economy greater scalability could be achieved. In fact unprecedented scalability. Hence a company like Facebook that reaches over a billion people needs relatively few employees. Hence small app companies can have billions in valuations but only have a few employees.

In short: Massive wealth concentration in the hands of just a few versus a much more labor intensive economy in previous times. And, combined with an economy that invests less in capital investments, productivity growth appears to be limited for years to come.

b. The decline in Moore’s law:

According to Brian Krzanich, the current chief executive of Intel, the era of Moore’s Law may be coming to a natural end. In a discussion with analysts on Wednesday night, he admitted that while his firm had “disproved the death of Moore’s Law many times over”, its next generation of microprocessors would take slightly longer to produce.

The issue of course: Staying ahead of the innovation curve and frankly it appears $GOOGL glass and $AAPL’s Watch are examples of companies struggling to define the next big thing. Note Tim Cook was very shy on providing any details on sales for the Apple Watch during the recent earnings call. Niche product yes, applications that are new category defining? Not so much.

Yes $AAPL will continue to generate massive earnings as a upgrade and product replacement engine. But it’s also vulnerable to regional issues as the China sales figures have shown. And if you have a market cap north of $700B you better come up with new revenue streams or you flat line eventually and your valuation falls.

But there’s nothing compelling new on the horizon for the moment. Yes the screens get better, the memory gets bigger, the processors get faster, and even a better camera is coming. But that’s all cosmetic isn’t it? What is it I can DO with it that’s different?

The next big thing? Tim Cook is hoping it’s the watch? TV? Cars? Really? Sounds like the rehashing of decades old platforms to me, improved, yes, repackaged, yes, but still the same old platforms.

So this question remains unanswered for now and with declining productivity, a declining Moore’s law, and shrinking real wages it doesn’t take a genius to figure out why there are issues ahead.

c. Social Impact.

As much as I love technology there’s a real dark side to it all that concerns me deeply and it goes to the core of the question: Does it make for a better society ultimately.

All the numeric data points above suggest that so far the benefits appear to be lacking. Wage growth, income inequality, GDP growth, employment availability, etc. all are pointing to a declining health in overall society. Yet technology provides more information at our fingertips than ever, the ability to get things done are unprecedented in human history. Frankly the tools available to us are fantastic!

So there’s a dichotomy here. What’s the problem?

It may come down to what people are choosing to do with the available technology and how and what companies are promoting to sell to consumers.

Let’s first look at the actual result in terms of human behavior and it’s not pretty.

In a nutshell: During the last 10 years Americans have chosen to use technology to spend more time glued to screens for entertainment and less for education. They also sleep more and work less:

Behavior

This data seems to support the lack in productivity growth. But it’s not a sudden trend, it’s a continuation of a trend that has been going on for decades: A sedentary lifestyle glued in front of screens and a food industry catering toward big appetites and offering huge caloric consumption (i.e Starbucks and Chipotle). The results are depressing:

An analysis published in JAMA Internal Medicine on Monday found that 75 percent of men and 67 percent of women ages 25 and older are now overweight or obese. That’s a startling shift from 20 years ago when 63 percent of men and 55 percent of women were overweight or obese.

And look what Wall Street values the most: Companies that are either promoting entertainment and screen sucking or enabling the same behavior. I use my recent compressed valuation sheet of just 6 companies as an example:

Cap

Facebook? Screen sucking for entertainment purposes. Sitting still. Amazon? Buy stuff with a mouse click, no need to move. Netflix? Watch TV on the couch, maybe with a burrito in hand. Google? Wall Street recently jammed the stock up on growth in youtube: Again sedentary entertainment. Apple and Microsoft can be argued are part of the enabler group by either providing the devices or software making it all happen. Of course gaming is an entire additional category of sedentary entertainment keeping people in front of screens and $MSFT is a big player in this industry as well.

The end result? Watch this short clip and weep as it shows you what has happened to society at large from a generational perspective in just a few short years:

What the impact on culture and society will be in the long term cannot not yet be clear, but behavior is changing rapidly.

To summarize: We have society at large growing in waistlines, but not in incomes, wealth or jobs, benefits or security. We have witnessed the largest expansion in debt in modern times financed by artificially low rates and precious little evidence of organic and structural growth in the system.

Yes we see select winners in this new economy but overall wealth generation is completely skewed toward the benefit of the few which brings me to the next point:

It won’t change and will only continue on its current trend. Why?

For one Americans are checking out of the political process:

voters

On the one hand who can blame them. Aside from social issues perhaps does voting make really make any difference? The trends above suggest not.

Approval ratings continue to paint a deep level of dissatisfaction with Congress’s performance:

approval

Yet both political parties, with the help of the Supreme Court and fund raising laws (think PACs) have made it a Nirvana for political incumbents to stay in office no matter what:

In the House, we counted 390 incumbents who ran on Election Day. Of those, four haven’t had their races called as of Nov. 10, so we’ll set them aside. Of the remaining 386 incumbents, 373 won, for a winning percentage of 96.6 percent.

16% approval rating and a 96.6% re-election rate. There. Democracy. Somewhere Putin must be smiling.

Of course we are not dealing with a well informed electorate either. When it comes to one of the largest issues impacting their lives (monetary policy) Americans are utterly uneducated as only 24% can even name Janet Yellen as chair of the Federal Reserve:

Janet Who

Yes, it’s somewhat depressing, but then Americans have zero input on the Fed, who runs it, or what they do. And this is the truth for all central banks. The world is run by big institutions and central banks none of which are democratically elected (think IMF, ECB, PBOC, BOJ, etc). And I understand this may never be a practical possibility given the complete focus of the electorate on entertainment and not education. But let’s acknowledge that we have democracy on paper only and only an illusion of choice.

And nobody has ever summarized this state of affairs better than George Carlin who predicted all this perfectly years ago in this now classic rant (NSFW):

So there you have it. Facts, numbers, trends all pointing to a picture not exactly compatible with an ever expanding bull market.

Quite the opposite. What all these data sets point toward is a structural malaise that has been masked by debt and zero interest rates. Janet Yellen is now talking about wanting to “gradually” increase rates. Best of luck with that.

I submit that all the data above points towards a structural bear case that is already in play, but masked by years of debt increases, QE programs and ZIRP policies.

And it’s not limited to the United States, technology is global and so are its impacts. Companies can do more with less. Fewer employees that is and pay less overall. And without a new impetus of growth this trend will not change, but only accelerate.

That unemployment chart from earlier? Let’s look at it again with some modifications:

UE trend

Each time unemployment reaches the 4-5% mark history suggests we get hit by a downturn and companies will lay off people by the millions. And we all know they will again. They do it even during supposed good times. Microsoft, Barclays, Qualcomm, etc. are already laying people off by the tens of thousands.

So what can the individual do? From my perspective people need to make a fundamental choice to the extent that they can do it: Take control of their own destiny. Decide whether they want to be serfs or in charge of their own future. The reality is this: One cannot rarely achieve independence working for someone else. Jobs are not secure, there’s no loyalty toward employees and jobs are fragile.

Our family has landed in the world of trading and we are very fortunate that this choice has allowed us to lead a life of independence. And this is the bright side of technology: It gives each individual the opportunity to reach a global marketplace with a product or service idea and partake in the flow of capital and create their own financial freedom.

All you have to do is get off Facebook, Netflix, youtube, eBay, and Amazon and start using the screens for something productive and work your butt off. Janet Yellen will appreciate the resulting productivity growth

All joking aside the message is very clear: Those that don’t find their way out of this will be stuck in low paying jobs, in debt, and with virtually no upward income mobility. And the trends suggest that nothing in the future with change this. In short: Institutionalized poverty for large swaths of the population. Now you can choose to believe this is all long term bullish, but I’ll take the variant view. All these factors point to a coming large secular bear market that central banks and governments have been seeking to avoid by spending tens of trillions of dollars. For now they are still managing to keep the math construct going, but it seems to be getting more and more difficult to keep appearances going and that fact is seen in the chart of the $NYSE:

NYSE M

Whether it cracks in the weeks to come or whether the construct can be maintained for longer is almost secondary to the end conclusion.

My only hope is that eventually we can do better with all this technology available to us, but I suspect we won’t until we can have an honest debate about what is actually happening to society. Hopefully this article makes a contribution to that end.